TORONTO – Third quarter revenue and earnings showed a strong Corus Entertainment but it could be stronger if it was bigger, says CEO John Cassaday.
Revenue and earnings for the period ended May 31st were strong at the company which owns 51 radio stations and television assets such as W, YTV, CMT and Movie Central, but yesterday’s sale of CHUM to Bell Globemedia dominated conversation during Corus’ third quarter conference call with financial analysts.
Corus has always said that in any consolidation round it is a buyer, not a seller and Cassaday said the company is of course interested in looking at any assets that might be spun out of the BGM purchase. "We’re optimistic about our future growth potential and that there will be future acquisitions going forward and that we can participate and they will be accretive," he explained.
But he was speaking mostly of radio because when asked about the A-Channels in particular, Cassaday said: "Our stated strategic focus is on specialty television. It’s a low priority but would be something we would look at."
Overall though, consolidation leading to larger companies is a must, said the CEO. "We do believe that Canada needs to allow for the creation of larger media companies," added Cassaday, who added that access to U.S. content and American capital with both grow in importance in the not too distant future. "Getting bigger will ensure we command the attention of U.S. studios," he said.
Consolidated revenues at Corus for the third quarter ended May 31, 2006 were $181.6 million, up 6% from the same period last year. Consolidated segment profit was $57.7 million, up 10%, and net income for the quarter was $23.2 million as compared to income of $19.4 million last year.
Corus Television contributed quarterly revenues of $99 million, up 9% from Q3 ’05, led by specialty ad growth of 11% and subscriber growth of 10%. Quarterly segment profit increased to $41.7 million, up 20% from $34.7 million last year.
Corus Radio revenues were $71.9 million, up 5% from last year. Segment profit was $21.1 million, down 5% from $22.2 million last year. Revenues and segment profit were impacted by the sale of Corus’ Red Deer assets and the multi-station swap with Astral in the province of Québec. On a "same station" basis, revenues were up 3% and segment profit was up by approximately 3%.
Radio president John Hayes told the call that challenges in Quebec have led to the dip in results in that division. "We had a revenue challenge with our new stations in Quebec," he said. The company has also changed the leadership at its Montreal cluster, to try and rectify that.
The resurgence of CHFI in the Toronto market has bumped Q107 from third place to fourth place (behind CHUM FM and EZ Rock), further impacted the division, plus, with Corus stations in its major markets skewing male and with beer advertising down 10%, fast food down 9% and automotive down 13%, radio went through a soft Q3.
Corus Content (Nelvana) revenues were $12.6 million, down 14% from $14.6 million last year. Segment profit was $500,000 compared to $100,000 last year. Revenues were down in the quarter as fewer episodes were delivered and Beyblade merchandising revenue declined.
However, Backyardigans is taking off and Cassaday said the show and merchandising potential are showing "good indications."
